Transcription of major histocompatibility complex (MHC) class I genes is regulated by both tissue-specific (basal) and hormone/cytokine (activated) mechanisms. Although promoter-proximal regulatory elements have been characterized extensively, the role of the core promoter in mediating regulation has been largely undefined. We have found that the class I core promoter consists of distinct elements that are differentially utilized in basal and activated transcription pathways. These pathways recruit distinct transcription factor complexes to the core promoter elements and target distinct transcription initiation sites. Class I transcription initiates at four major sites within the core promoter and is clustered in two distinct regions: "upstream" (-14 and -18) and "downstream" (+12 and +1). Basal transcription initiates predominantly from the upstream start site region and is completely dependent upon the general transcription factor TAF1 (TAF(II)250). Activated transcription initiates predominantly from the downstream region and is TAF1 (TAF(II)250)independent. USF1 augments transcription initiating through the upstream start sites and is dependent on TAF1 (TAF(II)250), a finding consistent with its role in regulating basal class I transcription. In contrast, transcription activated by the interferon mediator CIITA is independent of TAF1 (TAF(II)250) and focuses initiation on the downstream start sites. Thus, both in vivo and in vitro, basal and activated transcriptions of an MHC class I gene target distinct core promoter domains, nucleate distinct transcription initiation complexes and initiate at distinct sites within the promoter. We have proposed that transcription initiation at the core promoter is a dynamic process in which the mechanisms of core promoter function differ depending on the cellular environment.